This waythe PM has scored a narrow election victory. Until now the party had 42 seats.

In the aftermath, Netanyahu pledged to form "as broad a government as possible."

Analysts say Israel might be facing weeks of political bargaining to form a new cabinet and don't rule up the possibility of Netanyahu's bloc ending up being in opposition.

Netanyahu is now widely expected to seek an alliance with a new nationalist party, Habayit Hayehudi (Jewish Home), which is projected to have 12 seats.

The party - led by Netanyahu's former chief-of-staff Naftali Bennett - has been recently challenging Likud-Beitenu's dominance on the right.

The 18 or 19 seats for Yesh Atid, headed by journalist-turned-politician Yair Lapid, are seen as a stunning achievement for a newcomer.

Lapid has said he will not join Netanyahu's team unless the prime minister promises to push for peace with Palestinians.

Labor is expected to get 17 seats - up from just seven in the outgoing parliament. Labor leader Shelly Yachimovich is quoted saying by BBC that "there is a high chance of a shake-up and an end to the Netanyahu government."

Thirty-two parties were competing under a system of proportional representation for the 120-member Knesset. Parties must win at least 2% of the total vote to secure seats.

Full election results are expected during the day Wednesday, and the official ones will be announced on 30 January.

Speaking shortly after the voting ended on Tuesday, Netanyahu thanked the voters "for the opportunity to lead the state of Israel for the third time".

"Tomorrow we start anew," he said.

He listed as top priorities preventing Iran from obtaining nuclear weapons, stabilizing the economy, striving for peace in the region, more egalitarian military and civilian services and reducing the cost of living.

Netanyahu, 63, has been in office since the 2009 election. He also served one term as prime minister between 1996 and 1999.

In recent years he has accelerated home construction in the West Bank and east Jerusalem, drawing anger from Palestinian leaders and criticism from Western partners.

However, unlike in previous elections, the campaign focused largely on social and economic issues, rather than the prospects for a permanent peace agreement with the Palestinians.

There have been unprecedented protests against the rising cost of living and a recent report said nearly one in four Israelis lived in poverty.

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